Last week, the House Ways and Means Subcommittee on Select Revenue Measures held a review of "tax extenders" -- tax provisions that have been enacted on a temporary basis but are frequently extended. The hearing featured testimony from members of Congress who had sponsored legislation to extend one or more extenders, with each of them having to defend their particular tax breaks.
Continuing on our Tax Week theme, this blog will focus on the various models there are for tax reform. Obviously, there are an almost unlimited number of ways to reform the tax code, but we will lay out the major "styles" of tax reform.
The tax reforms we will mention range from largely staying within the current structure to dramatically simplifying the current system to dramatically altering its structure.
Tax Reform Cometh…Eventually – Today is Tax Day, when federal tax returns are due. Procrastinators have DC Emancipation Day, a holiday in the District of Columbia celebrating the day President Lincoln freed the slaves there, to thank for the extra day to file. The law prohibits Tax Day from falling on a weekend or federal or state holiday. Congress returns from a two-week hiatus just in time for lawmakers to take advantage of the tax filing deadline to promote their favorite tax reforms.
In honor of Tax Day on Tuesday, we will be doing blogs this week about the current shape of the tax code and what can be done to fix it. Our first blog will be about all the tax provisions that will expire at the end of the year, what has been labelled as "taxmageddon" (or the tax side of the fiscal cliff).
With the "Buffett Rule" set to get a vote in the Senate next week, we felt it was a good time to take a more in-depth look at the proposed policy -- at both its budget and tax impact.
Tax Policy Center president Donald Marron has a brief in Tax Notes that shows that spending on tax expenditures are higher than the commonly reported $1.1 trillion figure. As Treasury does not release the figures of the cost of all tax expenditures, they are often estimated by summing the individual and corporate tax preferences. However, this method excludes other provisions that reduce total tax revenues such as payroll or excise tax expenditures.
Bloom and Gloom – Washington’s famous Cherry Blossoms bloomed just ahead of the festival in their honor, and most promptly disappeared due to stormy weather in DC. Now, we can look forward to five weeks of celebrations with the namesakes mostly absent. A similar situation is playing out with the federal budget. There have been weeks of hearings, which will culminate this week as the House votes on the FY 2013 budget resolution. Yet, it is clear that there will be no budget coming out of Congress, again.
It is often said that tax expenditures operate as "spending through the tax code" and often obscure what the true size of government is. With the amount of tax breaks exceeding $1 trillion, that obfuscation has become increasingly important.
As the House Republican budget resolution has come out and alternatives will be sure to follow, CRFB is rolling out a blog series looking at all the budget resolutions that come up and taking a closer look at the one that's out there now. In this blog, we will look at Chairman Paul Ryan's (R-WI) tax reform plan.